Barrick Gold (NYSE:GOLD) versus Pan American Silver (NYSE:PAAS) Critical Review

Barrick Gold (NYSE:GOLD) and Pan American Silver (NASDAQ:PAAS) are both basic materials companies, but which is the superior business? We will contrast the two companies based on the strength of their analyst recommendations, risk, profitability, earnings, institutional ownership, valuation and dividends.

Risk and Volatility

Barrick Gold has a beta of -0.24, meaning that its share price is 124% less volatile than the S&P 500. Comparatively, Pan American Silver has a beta of 0.14, meaning that its share price is 86% less volatile than the S&P 500.



Analyst Recommendations

This is a breakdown of recent ratings and target prices for Barrick Gold and Pan American Silver, as provided by MarketBeat.com.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Barrick Gold 0 8 6 0 2.43
Pan American Silver 1 4 3 0 2.25

Barrick Gold currently has a consensus price target of $15.29, suggesting a potential downside of 7.38%. Pan American Silver has a consensus price target of $17.11, suggesting a potential upside of 30.79%. Given Pan American Silver’s higher probable upside, analysts plainly believe Pan American Silver is more favorable than Barrick Gold.

Dividends

Barrick Gold pays an annual dividend of $0.16 per share and has a dividend yield of 1.0%. Pan American Silver pays an annual dividend of $0.14 per share and has a dividend yield of 1.1%. Barrick Gold pays out 45.7% of its earnings in the form of a dividend. Pan American Silver pays out 35.9% of its earnings in the form of a dividend. Both companies have healthy payout ratios and should be able to cover their dividend payments with earnings for the next several years. Barrick Gold has raised its dividend for 4 consecutive years and Pan American Silver has raised its dividend for 2 consecutive years. Pan American Silver is clearly the better dividend stock, given its higher yield and lower payout ratio.

Insider & Institutional Ownership

58.9% of Barrick Gold shares are owned by institutional investors. Comparatively, 73.7% of Pan American Silver shares are owned by institutional investors. 12.9% of Pan American Silver shares are owned by company insiders. Strong institutional ownership is an indication that hedge funds, endowments and large money managers believe a company will outperform the market over the long term.

Earnings & Valuation

This table compares Barrick Gold and Pan American Silver’s revenue, earnings per share and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
Barrick Gold $7.24 billion 3.99 -$1.55 billion $0.35 47.17
Pan American Silver $784.49 million 3.49 $10.29 million $0.39 33.54

Pan American Silver has lower revenue, but higher earnings than Barrick Gold. Pan American Silver is trading at a lower price-to-earnings ratio than Barrick Gold, indicating that it is currently the more affordable of the two stocks.

Profitability

This table compares Barrick Gold and Pan American Silver’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Barrick Gold -21.10% 3.42% 1.62%
Pan American Silver -0.34% 2.11% 1.60%

Summary

Pan American Silver beats Barrick Gold on 9 of the 17 factors compared between the two stocks.

About Barrick Gold

Barrick Gold Corporation engages in the exploration and development of mineral properties. It primarily explores for gold and copper deposits. The company holds a 50% interest in the Veladero mine located in the San Juan Province of Argentina; 50% interest in the KCGM, a gold mine located in Australia; 95% interest in Porgera, a gold mine located in Papua New Guinea; 50% interest in the Zaldívar, a copper mine located in Chile; and 50% interest in the Jabal Sayid, a copper mine located in Saudi Arabia. It also owns gold mines and exploration properties in Africa; and gold projects located in South America and North America. Barrick Gold Corporation has strategic cooperation agreement with Shandong Gold Group Co. Ltd. The company was founded in 1983 and is headquartered in Toronto, Canada.

About Pan American Silver

Pan American Silver Corp., together with its subsidiaries, engages in the exploration, development, extraction, processing, refining, and reclamation of silver mines. The company owns and operates mines located in Mexico, Peru, Canada, Argentina, and Bolivia. It also produces and sells gold, zinc, lead, and copper. The company holds interests in the La Colorada, Dolores, Huaron, Morococha, La Arena, Shahuindo, San Vicente, Manantial Espejo, and Timmins mines. Pan American Silver Corp. was founded in 1979 and is headquartered in Vancouver, Canada.

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